Topical items and views on the impact of digitisation on publishing and its content and the issues that make the news. This blog follows the report 'Brave New World',
(http://www.ewidgetsonline.com/vcil/bravenewworld.html ), published by the Booksellers Association of the UK and Ireland and authored by Martyn Daniels. The views and comments expressed are those of the author.

Tuesday, December 04, 2012

Mr Osborne Stand Up Against Tax Abusers

This week, George Osborne stands in front of the UK
parliament and delivers his Autumn Report. As the UK economy continues to ‘flat
line’ some will say this is his most important report. It is his opportunity to
make a tremendous bold moral statement on tax avoidance that will do much more for
UK moral and business than tweeking the odd penny on personal taxes and duty.
It will also send a clear message to those who avoid UK tax and play EU registration
games, that enough is enough. We may be split over Leverson and the press
solution but we are as one on the morals of some of the tax avoidance moves
currently in play. We are all going through hard times and tax avoidance is
fast becoming immoral and tax abuse.

When Banks and Oil companies have made massive profits in
the past, they were subject to potential windfall taxes. These were often one
off excess tax demands to level the playing field. So why not apply the same
logic to those that have benefited significantly by raising huge revenues in
the UK, but then scurried off to hide
behind the skirt of some other EU country in order to avoid paying their fair
contribution to the people and country that made their wealth possible.

Luxemburg is now the ebook and digital media capital of
Europe. It probably makes very little sales there but also pays relatively little
in VAT there. So the larger economies of UK , Germany and France where they
actually do business suffer as they have higher VAT rates and no VAT revenues.
VAT is applied across the supply chain at the appropriate rate for the goods
and services, but in this case it nose dives in Luxemburg. The EU promises to
address the issue, but the EU is often full of promises and delayed timelines
and also tax standardisation is a minefield within a Federal Europe.

So why not accept the status quo and let Luxemburg keep
their 3%, but introduce an additional
annual tax on the difference as a windfall tax? This would apply to all sales
and services sold into the UK from companies registered for VAT in other EU countries.
In the case of ebooks it would raise excise on 17% of Amazon, Kobo and Barnes
and Noble’s UK sales. There may be some countries where the their rate is
higher than the UK and the company is based here, but in those cases the UK
economy will still raise 20% and it will be up to others what they do.

The message this would send out to Europe may be a difficult
one for some to swallow, but it would be good for the UK, UK businesses and may
even help apply a brake to some of the crazy ebook discounting that some can
afford to do more than others. It will certainly send a message to the EU
commission that VAT is a mess.

Corporation tax is more taxing and today we have the likes
of Google and Apple hiding in Ireland where they pay some 50% less than they
would in the UK. We also have one coffee company flying below the radar in the
Isle of Man, but making all their revenues in the UK. We have others such as
Starbucks with such complex trading accounts and cross country movements that
they appear to make no money and are serving coffee in the UK for nothing!

A straight forward windfall tax should be applied to
corporation tax avoiders on the same basis as the VAT top up.

Some will say the UK can’t do it and the EU would block any
such taxes. However, the alternative is everyone registering for business
elsewhere in exploiting tax differences within a common trading community,
which surely goes against the essence of the EU.

Mr Osborne, we must not just sit back and tax the tax payers
but step forward and tackle the causes of tax abuse.

2 comments:

Good Points, but will the UK/Euro politicians ever get around to really solving this problem? Starbucks seems to have moved its position, but I bet it will find another way of moving the goal posts back into their favour.

About Me

Before entering publishing I worked for many years as a Senior Executive in blue chip organisations in the retail, oil and automotive sectors. My publishing induction was initially as Director of Strategic Development at VISTA. There I was responsible for, and a contributor to, their highly acclaimed ‘Publishing in the 21st Century’ research series, the primary creator behind publishing services PubEasy and ‘batch.co.uk’, the initiator of the development of new Front Office systems to support publishers. In 2006 I joined Value Chain International(VCIL) initially as VP Marketing, Media and Publishing before becoming their President in 2009. In July 2011 the company's operations were acquired by Syncordia. I hold two non executive positions with publishing industry players Bibliophile Ltd and Haven Group and currently setting up Read Petite a service focused on providing digital short form material online via subscription.
Email mdaniels@opus57.co.uk